The GEO Group Announces Contract to House up to 2,580 California
Inmates at North Lake Correctional Facility in Michigan

November 04, 2010 08:14 PM Eastern Daylight Time

BOCA RATON, Fla.--(BUSINESS WIRE)--The GEO Group (NYSE: GEO) (“GEO”) announced today the signing of
a contract with the State of California, Department of Corrections and
Rehabilitation (the “Department”) for the out-of-state housing of up to
2,580 California inmates at GEO’s North Lake Correctional Facility (the
“Facility”) located in Baldwin, Michigan. GEO will undertake a $60.0
million renovation and expansion project to convert the Facility’s
existing dormitory housing units to cells and to increase the capacity
of the 1,748-bed Facility to 2,580 beds. GEO will use free cash flow and
borrowings available under its revolving credit facility to undertake
this renovation and expansion project.

GEO expects to complete the cell conversion of the existing dormitory
housing units in the second quarter of 2011 and the new 832-bed
expansion in the fourth quarter of 2011. GEO will begin the intake of
California inmates on May 1, 2011 under a management contract entered
into between GEO and the Department, which has an initial term through
June 30, 2014 and may be extended for successive two-year terms by
mutual agreement. The ramp-up of the Facility is expected to be
completed within approximately 19 months of May 1, 2011.

GEO expects that the management contract for the housing of California
inmates at the Facility will generate approximately $60.0 million in
annualized revenues at full occupancy with profit margins in line with
GEO’s company-owned facilities. The management contract will have a 90
percent occupancy guarantee once the Facility reaches that level of
occupancy.

George C. Zoley, Chairman and Chief Executive Officer of GEO, said,
“This is a very important milestone for GEO. We appreciate the
confidence placed in our company by the State of California with the
signing of this contract, which will assist the State in meeting its
present correctional bed needs in a cost-efficient manner under a
long-term agreement. We look forward to the successful implementation of
this contract at our company-owned North Lake Correctional Facility in
Michigan and to building on our long-standing partnership with the
California Department of Corrections and Rehabilitation.”

The GEO Group is a world leader in the delivery of correctional,
detention, and residential treatment services to federal, state, and
local government agencies around the globe. GEO offers a turnkey
approach that includes design, construction, financing, and operations.
GEO represents government clients in the United States, Australia, South
Africa, and the United Kingdom. GEO’s worldwide operations include the
management and/or ownership of approximately 79,000 beds at 116
correctional, detention and residential treatment facilities, including
projects under development.

This press release contains forward-looking statements regarding
future events and future performance of GEO that involve risks and
uncertainties that could materially affect actual results, including
statements regarding estimated earnings, revenues and costs and our
ability to maintain growth and strengthen contract relationships.
Factors that could cause actual results to vary from current
expectations and forward-looking statements contained in this press
release include, but are not limited to: (1) GEO’s ability to
successfully pursue further growth and continue to enhance shareholder
value; (2) GEO’s ability to access the capital markets in the future on
satisfactory terms or at all;(3) risks associated with GEO’s
ability to control operating costs associated with contract start-ups;
(4) GEO’s ability to timely open facilities as planned, profitably
manage such facilities and successfully integrate such facilities into
GEO’s operations without substantial costs; (5) GEO’s ability to win
management contracts for which it has submitted proposals and to retain
existing management contracts; (6) GEO’s ability to obtain future
financing on acceptable terms; (7) GEO’s ability to sustain company-wide
occupancy rates at its facilities; and (8) other factors contained in
GEO’s Securities and Exchange Commission filings, including the forms
10-K, 10-Q and 8-K reports.